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THE PROMISE OF SAFE FOOD: A Law-in-Action Perspective.

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Title: THE PROMISE OF SAFE FOOD: A Law-in-Action Perspective.


1
Whos Minding the Store - The Current State of
Food Safety and How It Can Be Improved
THE PROMISE OF SAFE FOOD A Law-in-Action
Perspective.
Denis W. Stearns, J.D. dstearns_at_marlerclark.com
2
FOOD the most dangerous product in the United
States?
  • In fact, contaminated food products caused more
    deaths each year than the combined totals of all
    15,000 products regulated by the U.S. Consumer
    Product Safety Commission.1
  • For just FIVE foodborne pathogens, medical
    costs, productivity losses, and the costs of
    premature death total 6.9 BILLION2

1. Buzby, et al. Product Liability and Microbial
Foodborne Illness (2001) ERS Agricultural
Economic Report No. 799. 2. USDA ERS 2000
Cost-estimate, cited in S. Crutchfield T.
Roberts, Food Safety Efforts Accelerate in the
1990s, Food Review, 233, p. 48
(September-December 2000).
3
Primary Incentives for Food Safety
ECONOMIC Cost/Benefit Analysis Return
on Investment Brand-value, good
will LEGAL Regulations Lawsuits
4
THE NEED FOR REGULATION Market Failure Public
Safety
Food is a Credence Good Because safety is
invisible, no price premium Companies unable to
compete on safety
For the most part, food safety is a credence
attribute, meaning the consumers cannot evaluate
the existence or quality of the attribute before
purchase, or even after they have consumed it.1
1. See E. Golan, et al., Savvy Buyers Spur Food
Safety Innovation in Meat Processing, Amber
Waves, April 2004,
5
HISTORY OF FOOD REGULATION Safe Food as a Moral
Obligation
Law of Moses required a perfect and just
weight, a perfect and just measure. DEUTERONOMY
2515 Han Dynasty, 2nd Century BC prohibited
the making of spurious products, and the
defrauding of buyers. Roman Law, Theodosian
Code, A.D. 438 required bread to for public sale
to be arranged on the steps of a building
according to its grade to prevent fraud.
Food exchange was neither anonymous nor
disinterested it was defined by relationship,
not contract nor other legal duty.
6
Merchants and the Rise of Markets
The Middle Ages saw the rise of farmer-sellers
and merchant-manufacturers selling at local
markets. Expanded trade in the countryside
wasitself a precondition for the growth of the
cities.1 Given the local character of the
economy, a merchants reputation would be
well-known and much relied upon.
Food quality and integrity protected by
extra-legal sanctions, the importance of
preserving reputation, and self-help.
1 See H.J. Berman, LAW AND REVOLUTION 296
(Harvard 1983)
7
Examples of Extra-Legal Sanctions
In 1315, in France, angry French citizens staged
mass punishment of 16 bakers who mixed flour with
animal droppings, lashing them to wheels and
beating them. Butcher paraded through the
streets in a garbage cart for the offence of
selling measly meat.1
Community accountability thus joins moral
accountability.
See H.J. Berman, LAW AND REVOLUTION 296
(Harvard 1983)
8
Merchant Guilds Purity Laws
Merchants formed self-policing guilds, giving
rising to a body of customary mercantile law to
resolve disputes. ? violators risked expulsion
from the guild ? meant to protect reputation
of merchant class As guilds became more
powerful, self-policing lessened, giving rise to
local ordinances prohibiting adulteration
Purity laws enactede.g., Thuringian
Rostbratwurst purity law of 1432, and the
Bavarian beer purity law of 1516
The lack of anonymity in the food supply meant
community reputation continued to be primary
incentive for safe food.
9
The Enforcement of Civil Remedies The Origins of
Product Liability
  • A product need only be as good as was promised
  • Broken promise both creates and defines
    liability

the only safe rule is to confine the right to
recover to those who enter into the contract if
we go one step beyond that, there is no reason
why we should not go fifty. The only real
argument in favor of allowing the action is,
that this is a case of hardship but that might
have been obviated, if Mr. Wright had made
himself party to the contract.
Winterbottom v. Wright, circa 1842, England
(affirming rule of privity).
10
GROWTH OF INDUSTRIALIZATION From the 18th to the
20th Century
AGRARIAN
INDUSTRIAL
URBAN
RURAL
FOOD BOUGHT GROWN TO SELL
FOOD GROWN TO EAT
11
The Rise of National, Vertically- Integrated Food
Companies
12
The Invention of Refrigerated Rail Car
Nationwide Distribution
And so a food supply once defined by a lack of
anonymity and community accountability
transformed into its opposite.
13
ECONOMICS BECOME KING A Call for National
Regulation
Factory food production de-emphasized quality,
emphasized cost productivity. Investing in
quality and safety was an economic and
competitive disadvantage.
there is an incentive for sellers to market poor
quality merchandise since the returns for good
quality accrue mainly to the entire grouprather
than to the individual seller. George Akerlof,
Ph.D. from The Market for Lemons Quality
Uncertainty and the Market Mechanism.
14
Definition of Adulteration
So who was the Pure Food Act Federal Meat
Inspection Act really intended to protect?

by Prosper Montagne, published 1938
15

Collective Punishment Fresh Spinach
With the fall 2006 outbreak, all spinach growers
suffered from decreased consumer demand for their
product, even though only one growers spinach
was contaminated. See L. Calvin, Outbreak Linked
to Spinach Forces Reassessment of Food Safety
Practices, Amber Waves, June 2007,
16
THE TRIUMPH OF BIG FOODLeveling the Competitive
Playing Field
The unwholesome, adulterated, mislabeled, or
deceptively packaged articles can be sold at
lower prices and compete unfairly with the
wholesome, not adulterated, and properly labeled
and packaged articles, to the detriment of
consumers and the public generally. FMIA, 602
Congressional Statement of Findings,
Buried in the disputes over federal
regulation is a conflict between local and
national food companies. In various ways,
federal regulations conferred competitive
advantage on national firms. See C. Coppin and
J. High, THE POLITICS OF PURITY Harvey
Washington Wiley and the Origins of Federal Food
Policy (1999).
Compare Medieval Merchant Guilds
self-policing with Western Growers
Association Produce Marketing Agreement.
17
BENDING THE RULE OF PRIVITY An Exception for
Unsafe Food.
To the old rule of privity should be added
another exceptionnot one arbitrarily worked by
the courtbut arising...from the changing
conditions of society. a manufacturer of food
products under modern conditions impliedly
warrants his goods when and that such warranty
is available to all who may be damaged by reason
of their use in the legitimate channels of
trade Mazetti v. Armour Co., 75 Wash. 622
(1913)
18
Creating Modern Product Liability The Justice
Traynor Two-Step
STEP ONE The consumer no longer has the means
or skill enough to investigate for himself the
soundness of a product. Escola v. Coca Cola
Bottling Co., 150 P.2d 436, 467 (1944) (Traynor,
concurring). STEP TWO The purpose of strict
liability is to insure that the costs of injuries
resulting from defective products are borne by
manufacturers that put such products on the
market rather than by the injured persons who are
powerless to protect themselves. Greenman v.
Yuba Power Products, 377 P.2d 897 (1963)
19
Who Pays for the decision NOT to invest in food
safety?
Private markets often fail to provide adequate
food safety because information costs are high,
detection often very difficult, and the nature of
contamination is complex. Underlying many of the
food safety failures is the existence of
externalities, or costs not borne by those whose
actions create them. Helen H. Jensen,
Food-system risk analysis and HACCP, p. 63, in
NEW APPROACHES TO FOOD-SAFETY ECONOMICS, G.J.
Velthius, et al. (eds.) (2003).
June Dunning
Betty Howard
Ruby Howard
20

Externalities costs not borne by those whose
actions create them.
Reported outbreaks probably account for only a
small proportion of deaths from unknown foodborne
agents because most foodborne outbreaks are never
recognized or reported.1
SOCIETY
Food Industry
FBI Costs
1. Paul Frenzen, Deaths Due to Unknown Agents,
Emerging Infect. Dis., 10 9 (Sept. 2004).
21
THE NEED FOR LITIGATION Market Failure Public
Safety
Lawsuits by consumers to recover damages due to
foodborne illness can affect the behavior of
firms that make or distribute food products. The
magnitude of this effect is unknown, however,
because information about litigation involving
injuries due to food products contaminated by
microbial pathogens is scarce. Firmsgenerally
prefer to resolve consumer complaints about
foodborne illness outside the courtroom, where
they can keep the compensation payments
confidential, and avoid or reduce adverse
publicity about their products. (Buzby, et al.,
Chapter 1, at p. 2)
22
Economically-speaking, a product liability
lawsuit is a COST-SHIFTING mechanism.
Person injured by unsafe food pays cost in
medical bills, lost wages, and pain.
Lawsuit seeks recovery of damages caused by
(profits of) sale of unsafe food.
While lawsuits remain a relatively ineffective
incentive to increased food safety investment,
they are highly effective at compensating the
person injured by defective foods.
23

LEARNING TO TRUST AGAIN A Return to
Locally-Sourced Foods
Locavore a person who adopts the practice of
relying on fresh, locally grown food items 2007
Oxford American Dictionary Word of the Year
24
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